Lenders may turn to brokers after MMR

Lenders may rely more on brokers rather than sell direct after the Mortgage Market Review paper on distribution and disclosure, says Stephen Smith, director of housing and external affairs for Legal & General.

Speaking the mortgage industry conference and exhibition yesterday in London, organised by the Council of Mortgage Lenders Smith says the paper may help to level the playing field between intermediaries and direct business.

He says: “What seems clear is that the combined costs of Individual Registration, full mortgage qualifications for all selling staff and the need to validate affordability and suitability in all sales- both advised and non advised is likely to increase the costs of doing business direct for lenders.

“Any imbalance between the costs of originating business via intermediaries or branches will change and lenders may find it even more evident that intermediary distribution is cost effective, flexible and capable of growth.”

Smith went on to say that there would need to be a lot of consideration given to the proposals contained in the consultation paper to alter the responsibilities of intermediaries for assessing affordability.

I was surprised by the response generated by John Malone’s recent comments that brokers should be diligent about who they deal with whether this be borrowers, introducers and particularly solicitors. Recently I have written about mortgage fraud and why brokers should be careful about protecting themselves from being used by people hell-bent on defrauding lenders. […]

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Luke…….you re too negative or still rely on procs and haven t embraced the other revenue streams.

the branch networks couldn t cope with the volume if lenders turned the taps on. Take Halifax for example recently……to get a client directly they had to offer £500 towards elec & gas, my proc fee would have been £460 and I would have done all the keying & processing……they aren t getting the insurance sales as the client is coming back to me……so its cost them more than the broker channel would have and they have had to offer a lower interest rate, so lose there too!!!!!!!!

Unless you have been living on Mars for the last 18 months you would know it is quite difficult to change a life long career let alone get a part time job stacking shleves at the Supermarket or working in McDonalds.

The problem is, the banks WILL continue to offer better rates direct and undercut brokers. Watch the television of an evening and you’ll see two of the biggest receivers of intermediary business, Santander and Halifax, both encouraging consumers to go direct to them to get lower rates. These lenders account for nearly 45% of the mortgages written. These banks already have to have their FPMs authorised, the cost of registering their mortgage sellers is minimal and definitley outweighs the cost of paying proc fees and losing all of the other revenue streams they capture by dealing with the consumer direct.

They are increasing their branch networks because the know the value of footfall into their branches, get the consumer in through the door and sell them every branded product under the sun – its not right and the client doesn’t receive advice but do you think they care? No! They have achieved a lower rate on their mortgage with lower fees than if they had used a broker.

Last person to leave the mortgage intermediary market please turn the lights out.

well done GMS………….I agree they will rely on our market as they will not want to pay and have the grief of registering each adviser as approved person. dont know what everyone is moaning about i am flying. up 30% on last year to date. Diversification is the answer.

I don’t see that as negative by anon just a statement of FACT. The FSA and lenders have overseen a reduction in broker numbers way and above what was required for a normal correction. 32000 down to 9000 at the most, after IR and the MMR broker number will be 5000 tops at the end of 2011. Yes you can recruit people, newbies with no experience as the decent and knowledgable brokers will/have already found something much better to do.

Yet another negative response from an anonymous poster above.
Surely if there is too much business for brokers to handle this proves the original point.
I for one would rather be looking at a 12 hour plus day innundated with cases than the same day chasing after work. Plus if the above prediction comes true there is such a thing as recruitment.